{"id":45524,"date":"2025-11-26T11:35:31","date_gmt":"2025-11-26T11:35:31","guid":{"rendered":"https:\/\/quickassetsmarket.com\/index.php\/2025\/11\/26\/zscaler-stock-dives-after-weak-guidance-is-the-crash-justified\/"},"modified":"2025-11-26T11:35:31","modified_gmt":"2025-11-26T11:35:31","slug":"zscaler-stock-dives-after-weak-guidance-is-the-crash-justified","status":"publish","type":"post","link":"https:\/\/quickassetsmarket.com\/index.php\/2025\/11\/26\/zscaler-stock-dives-after-weak-guidance-is-the-crash-justified\/","title":{"rendered":"Zscaler stock dives after weak guidance: Is the crash justified?"},"content":{"rendered":"
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Zscaler stock price erased the gains made in the regular session after the company published strong results and a mild forward estimate. It initially rose by 3.35% on Tuesday to $290 and then retreated by over 7% to $266.90 in the extended hours. It settled to the lowest point in September. <\/p>\n

Zscaler\u2019s reported strong results and mild guidance<\/h2>\n

Zscaler, one of the top companies in the cybersecurity industry, is doing well as the ongoing AI boom drives more demand for its services. Its annual revenue moved<\/a> from over $673 million in 2021 to over $2.6 billion in the last financial year.<\/p>\n

Most notably, the company has continued to narrow its losses in this period. It made a large net loss of $262 million in 2021 to $41 million in the last financial year. <\/p>\n

Its revenue growth continued in the first quarter of the year. Its revenue rose by 26% to $788 million, higher than its guidance of between $772 million and $774 million.<\/p>\n

Additionally, the company\u2019s operating profit was higher than its previous guidance. It made an operating profit of $172 million, higher than its guidance of between $166 million and $168 million.<\/p>\n

The earnings per share of 96 cents was also higher than its guidance. Historically, Zscaler has always been a conservative company that avoids overpromising. <\/p>\n

More numbers showed that its annual recurring revenue (ARR) rate jumped to over $3.2 billion as companies continued to embrace its technology, especially in the AI security. Indeed, the number of companies paying over $1 million a year rose to 698 from 491 in the second quarter of last financial year.<\/p>\n

Most importantly, the company has become more profitable, with the operating profit margin rising to 22% and its free cash flow rose to 52%.<\/p>\n

The Zscaler stock price dropped as the management\u2019s guidance, while strong, was lower than expected. It expects its revenue will be between $797 million and $799 million, representing a 23% growth rate.<\/p>\n

READ MORE: What next for Oklo stock price after the $13 billion wipeout?<\/a><\/p>\n

For the year, the company believes that its revenue will be between $3.28 billion and $3.3 billion, representing about 23% annual growth rate. The operating profit is expected to be between $172 million and $174 million.<\/p>\n

There are chances that the company\u2019s real number will be much higher than its guidance because of its history of outperformance. <\/p>\n

Is ZS valuation justified?<\/h2>\n

A key concern about Zscaler is that its business is relatively overvalued as its forward price-to-earnings ratio rose to 76, much higher than the sector median of 22. Its multiple is higher than other companies like Palo Alto Networks, Fortinet, and Snowflake.<\/p>\n

This valuation metric is mostly because of its strong and consistent growth over the years and the fact that the company has now become profitable. <\/p>\n

Still, the company\u2019s rule-of-40 metric points to the company being less overvalued. Its forward revenue growth is ~23%, while its operating profit and free cash flow margins are 22% and 26%, respectively. This gives it a rule-of-40 multiple of 45% and 49%, respectively. That is a sign that the company is not all that expensive.<\/p>\n

Zscaler stock price analysis <\/h2>\n
Zscaler<\/a> stock chart | Source: TradingView<\/figcaption><\/figure>\n

The daily timeframe chart shows that the Zscaler stock price peaked at $336 earlier this month and then tumbled to a low of $268. After rising to $290 on Monday, the stock tumbled to $266 after its earnings.<\/p>\n

This crash happened as the company formed a double-top pattern at $317 and a neckline at $260. A double-top is one of the most popular bearish patterns.<\/p>\n

Therefore, the stock will likely retreat, potentially to $250, and then resume the uptrend as investors start to buy the dip. Over time, the stock will likely retest the key resistance level at $317.<\/p>\n

READ MORE: Plug Power stock price has crashed: is it a bargain or a value trap?<\/a><\/p>\n

The post Zscaler stock dives after weak guidance: Is the crash justified?<\/a> appeared first on Invezz<\/a><\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Zscaler stock price erased the gains made in the regular session after the company published strong results and a mild forward estimate. It initially rose by 3.35% on Tuesday to $290 and then retreated by over 7% to $266.90 in the extended hours. It settled to the lowest point in September.  Zscaler\u2019s reported strong results <\/p>\n","protected":false},"author":1,"featured_media":45525,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":{"0":"post-45524","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-world"},"_links":{"self":[{"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/posts\/45524","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/comments?post=45524"}],"version-history":[{"count":0,"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/posts\/45524\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/media\/45525"}],"wp:attachment":[{"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/media?parent=45524"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/categories?post=45524"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/tags?post=45524"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}